Kazakh Central Bank Gets ‘Priority Right’ to Buy Gold
(Corrects Kazakh gold output in final paragraph of story published yesterday.)
Kazakhstan’s central bank plans to lock up domestic supplies of refined gold by using a “priority right” it received from the government to buy bullion designated for exports amid record prices for the metal.
The National Bank of Kazakhstan plans to use the buying privilege “in full” after changes go into effect Jan. 1, the Almaty-based lender said in an e-mailed statement today.
Central banks are expanding their gold reserves for the first time in a generation as bullion rises for an 11th consecutive year, the longest winning streak since at least 1920, as investors seek to diversify their holdings away from equities and some currencies. Venezuelan President Hugo Chavez last week ordered the central bank to repatriate $11 billion of gold reserves held in developed nations’ institutions.
Kazakhstan’s gold holdings were valued at $3.5 billion at the end of last month and accounted for about 9.5 percent of the nation’s gross international reserves, central bank data show.
The central bank may provide advance payments to Kazakh gold producers, becoming their “secure partner” in the coming years, according to the statement. The bank also asked the government to eliminate value-added tax incentives that spurred gold exports.
Kazakh authorities are seeking to induce producers to use the existing capacity to refine gold and curtail exports of raw materials, the bank said.
Glencore International AG’s TOO Kazzinc is the only Kazakh company making gold ingots that meet international standards, the bank said.
Government measures may allow Kazakhmys Plc (KAZ), which produces gold bars only to Kazakh standards, to make ingots that meet international criteria, allowing the nation to refine all of its precious-metals output, according to the central bank.
The Central Asian nation produced 21.4 metric tons of gold in the first seven months, an increase of 48 percent from a year earlier, according to the state statistics agency. Refined gold accounted for about 45 percent of the total.
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